Lecture #3-The Politics of ISI + Populism
The first time the elitist class was challenged and the middle class was opened up. We begin by
looking at the development model of this time.
This time period is in the 1930s and onwards
There was World War II and there was the Great Depression.
ISI- Import Substitution industrialization
A strategy of industrial development based on manufacturing goods domestically that were
This is also known as protectionism
o E.g. It involves tariffs or taxes on imports. Quotas or limits on imports. There were also
tax incentives + direct subsidies to local industries in Latin America. Moreover, there
were monetary systems
Form of economic independence/self sufficiency
o They wanted to break the cycle of selling cheap raw materials while buying high end
industrialized goods which means they were In a deficit.
o General public can buy expensive items nowadays. Rich class and middle class/working
class are able to buy these goods.
Improvements in social + economic indicators
o Better standard of living, life expectancy grew from 52 to 64 years, infant mortality
dropped, region had 6% growth, established a manufacturing base
Limitations of the system
Initially successful at jumpstarting economy but long term there was unravellling.
Sectoral disparities overtime
o Some industries were not protected and they went out of business
o Over time, the industries that were dependent on governments were not efficient nor
their goods good.
o No incentive to innovate to become cheaper and faster…products become less
competitive since they are dependent on government
o They chose the wrong industries, like developing an airline
Disappointing industrial employment results
o No job creationpeople cannot buy products-Small domestic markets limited
growthas a result no profit.
Countryside were not distributed…Peasants were stuck in the Asante system
o Over time, how many refrigerators, televisions etc…do people need to buy? THe market
has been run dry.
At the end, Latin America became VERY dependent on loans (which was not a good thing) Cristobal Kay (2002) “Why East Asia overtook Latin America”
TimingLA were more poised, far greater natural resources, closer to US, industrialized earlier
than East Asian tigers. They should have risen but they have not (HK, Singapore, Taiwan, SK)
1980s, East Asian tigers grew while LA stagnated.
EA tigers switched to EOI rather than being stuck with ISI.
Export oriented Industrialization (EOI)
Industrialization strategy that is heavily tied to expanding manufactured goods.
EA tigers did this in the 1960s and timing was key
Great period of expansion.
BUT LA, was closed off in 1960s but they failed in expanding even though they had a 20 year
head up on East Asian tigers.
BY 1980s, LA were now behind EA tigers and now they cannot repeat the path EA tigers took.
Why did Latin America stay with ISI for so long, even when it was failing them?
US needed them to do so such that they have the materials to produce weapons etc…
Scial and political changes
Emergence of middle class
Rise of an urban working class “unionization and Mobilization”
Increase ddemands for political participation and social inclusion. This is known as the social
Debate over the appropriate role of the urban working classes within the economic and political
system in early 20 century Latin America.
Corporatism and Clientism
Corporatisma system in which interest groups become an institutionalized part of the political
o Pressuring government policy (multiple groups)
o Europeans have corporatism and have itnereste groups to consult with government
State corporatism System of interest group representation in which the state uses interest
group structures to control and dominate citizen groups and the interests they are allowed to